The S&P 500 closed last week at its best level ever in the face of more inflation concerns, rising interest rates, the start of third-quarter earnings season, and a presidential election that’s still a coin toss.
But even with those unknowns, artificial intelligence (AI) remains the hottest story of the year. The iSTOXX AI Global Artificial Intelligence 100 Index – which is comprised of 100 companies heavily invested in the trend – closed Friday at its best level since July.
The AI-fueled rally even propelled the utility sector to a gain of 25% year to date. That makes it the best performing sector in 2024.
As the AI story evolves, astute investors will start to look for opportunities in companies supporting it – often referred to as “picks and shovels” plays. I’ve discussed a few of these such prospects over the last year, and one in particular continues to cross my desk in my research…
I’m talking about liquid cooling systems for data centers.
The growth of AI has led to more demand for computing capacity – which requires more data centers to house servers. This creates greater power needs and demand for more efficient power as electricity prices surge.
The cooling of these data centers has traditionally been done via air cooling, and the new generation of this technology is liquid cooling. Liquid cooling systems are 25 times more effective than previous air methods. Not only does this tech lower power costs, but it also allows the servers to run at peak efficiency.
And considering traditional air cooling systems aren’t capable of supporting the newest Nvidia (NVDA) graphics processing units (GPUs), liquid cooling is no longer a choice… it’s a requirement.
This technology is incredibly important to the future of AI. And as a result, it holds massive investment potential. But it’s still an early-stage innovation.
Today, only 5% of data centers are equipped with liquid cooling systems. By 2028, that figure is expected to reach 25%. And eventually, it will need to get close to 100%. That’s five-fold growth in just four years.
So, what’s the best way to invest in this niche trend?
On today’s video update, I provide the details of a basket of the firms in position to take advantage of the increased demand for liquid cooling systems from data centers. I encourage you to check it out below.
Here’s to the future,
Matt McCallEditor, Market Insights
The post A Hidden Investment Opportunity in AI appeared first on Centurion Publishing.
